Examining the role of board characteristics in the CSR–dividend nexus: Evidence from European firms

Understanding how a company's board characteristics influence the connection between corporate social responsibility and dividend policies has become important. As more stakeholders become concerned about companies’ ethical behavior, businesses are feeling increased pressure to balance their social responsibilities with financial rewards. This paper examines the relationship between corporate social responsibility and dividend payouts in European firms, with a focus on the moderating role of board characteristics. To achieve this goal, we examined a sample of 1,376 publicly listed European companies over the period from 2014 to 2023, using dynamic panel data regressions, specifically the System Generalized Method of Moments (SGMM). The findings suggest that having strong corporate social responsibility performance significantly influences the decision to distribute dividends. The study also shows that board characteristics moderate the relationship between corporate social responsibility performance and dividend payouts. These insights carry substantial policy implications. Studying the CSR–dividend relationship with board characteristics as a moderator highlights the board’s critical role in aligning social responsibility with shareholder interests. It supports policies promoting board independence, diversity, and expertise to enhance governance quality. This can encourage responsible dividend strategies that reflect both financial performance and ethical commitments. Policymakers may use these insights to refine corporate governance regulations and CSR disclosure standards.